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Monarch sale to Greybull Capital secures £125m permanent capital and liquidity facilities

Monarch Holdings has completed its strategic review and restructuring programme under which it has secured £125 million of permanent capital and liquidity facilities provided by Greybull Capital, anchored by a £50 million capital commitment, with contributions from the Group’s prior shareholders, principally the Mantegazza family.

Greybull has also acquired 90% ownership interest in Monarch, with the remaining 10% passing to the Group’s defined pension scheme and ultimately the Pension Protection Fund (PPF).

Meanwhile, the UK Civil Aviation Authority has renewed the Group’s ATOL licence.

Greybull has stated that it will provide significant capital to Monarch in order to grow the Group and build on its long-established heritage and trusted brand name.

Under the leadership of new chief executive Andrew Swaffield, Monarch has undertaken a comprehensive strategic review of all areas of the business, from operations to ownership and financing. The review aimed to create the optimum structure to realise the significant opportunity to build on Monarch’s respected brand and distinctive offer to its customers in the European scheduled leisure carrier market.

The main outcomes of Monarch’s strategic review and restructuring, which have led to the successful transaction with Greybull, are: optimisation of the fleet from 42 to 34 aircraft, and revised agreements with lessors to either mark-to-market or early return of 10 aircraft from the current fleet; the securing of a new Boeing fleet order for 30 737 MAX 8 aircraft with deliveries from 2018 to 2020; ending both long-haul and charter flying by April 2015; an airline network to specialise in Monarch’s ‘heartland’ of scheduled short-haul European leisure routes, with increased average frequencies, aircraft utilisation, productivity and profitability; to focus on five UK airport bases – London Gatwick, Manchester, Birmingham, London Luton and Leeds-Bradford – and the closure of East Midlands from summer 2015.

Other outcomes include: material concessions agreed with employees across the Group to enable the successful restructuring, including reductions in pay of up to 30%, with more than 90% of unionised staff voting to accept changes, and some 700 redundancies, two-thirds of which were voluntary; the reduction of the Group’s operating cost base, in line with other low-fare airlines, and increased efficiencies across the business; and finally the resolution of the Group’s pension deficit through agreement with the Pensions Regulator, PPF and the Trustee of the Monarch Airlines Limited Retirement Benefits Plan which will result in the Plan being assessed for entry into the PPF. The PPF would then hold a 10% stake in the Group, in line with its principles in restructurings such as this. The Pensions Regulator has cleared the restructuring.

Monarch Group CEO, Andrew Swaffield, remarked, “I am delighted to welcome the Greybull team as the new owners of the Monarch Group. We have a shared vision for the strategic direction and prospects for the business, and I am looking forward to working with them to implement the exciting plans for building our future. I would personally like to thank all Monarch employees who have been hugely supportive of the initiatives which were essential to complete this transaction. I am very proud to be leading such a team – together we will be building a great future for the Group.”

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